Press Release

American Equity Reports Third Quarter 2018 Results

Third quarter 2018 net income of $169.3 million or $1.85 per
diluted common share

Third quarter 2018 non-GAAP operating income1 of
$171.1 million or $1.87 per diluted common share

Third quarter 2018 annuity sales of $1.0 billion

Policyholder funds under management of $50.6 billion

Third quarter 2018 investment spread of 2.67%

Estimated risk-based capital ratio of 386% compared to 378% at
December 31, 2017

WEST DES MOINES, Iowa--(BUSINESS WIRE)--Nov. 5, 2018--
American Equity Investment Life Holding Company (NYSE: AEL), a leading
issuer of fixed index annuities (FIAs), today reported third quarter
2018 net income of $169.3 million, or $1.85 per diluted common share,
compared to net income of $57.0 million, or $0.63 per diluted common
share, for third quarter 2017.

Non-GAAP operating income1 for the third quarter of 2018 was
$171.1 million, or $1.87 per diluted common share, compared to non-GAAP
operating income1 of $87.2 million, or $0.96 per diluted
common share, for third quarter 2017. On a trailing twelve-month basis,
non-GAAP operating return on average equity excluding average AOCI1
was 18.1% based upon reported results and 14.8% excluding the impact of
assumption revisions. Third quarter 2018 net income and non-GAAP
operating income1 were positively affected by $82.8 million
($0.91 per diluted common share) and $80.6 million ($0.88 per diluted
common share), respectively, for revisions to assumptions utilized in
the determination of deferred policy acquisition costs, deferred sales
inducements and the liability for future benefits to be paid for
lifetime income benefit riders. Net income and non-GAAP operating income1 for
the third quarter of 2017 were positively affected by $39.2 million
($0.44 per diluted common share) and $34.4 million ($0.38 per diluted
common share), respectively, for assumption revisions.

POLICYHOLDER FUNDS UNDER MANAGEMENT UP 1.4% ON $1.0 BILLION OF SALES

Policyholder funds under management at September 30, 2018 were $50.6
billion, a $677 million or 1.4% increase from June 30, 2018. Third
quarter sales were $1.0 billion before coinsurance ceded and $0.9
billion after coinsurance ceded. Gross sales and net sales for the
quarter increased 14% and 12%, respectively, from third quarter 2017
sales. On a sequential basis, both gross and net sales decreased 13%.

Total sales by independent agents for American Equity Investment Life
Insurance Company (American Equity Life) decreased 13% sequentially
while total sales by broker-dealers and banks for Eagle Life Insurance
Company (Eagle Life) decreased by $28 million or 12% sequentially. Sales
of FIAs were down 12% sequentially to $1.0 billion driven by the decline
in sales for American Equity Life. FIA sales for Eagle Life of $164
million were down $9 million or 5% sequentially.

Commenting on sales, John Matovina, Chairman and Chief Executive
Officer, said: "We experienced a sequential decrease in FIA sales in
American Equity Life's independent agent channel as competition remains
intense. Reflecting the attractiveness of accumulation products in the
current market environment, the Choice Series continues to be our
best-selling product line at American Equity Life with 35% of sales in
the third quarter. In the guaranteed lifetime income space, the
IncomeShield Series has gained wide acceptance with our independent
agents. IncomeShield was the second-best selling product line accounting
for 26% of American Equity Life's sales in the third quarter."

Commenting on the market environment and the outlook for FIA sales,
Matovina added: "The market in each of our distribution channels
continues to be competitive with a number of competitors raising caps,
participation rates and guaranteed lifetime income. Our higher new money
investment yields allowed us to take several actions late in the third
quarter and early in the fourth quarter to enhance our competitiveness.
In September, we raised S&P 500 participation rates on our American
Equity Choice and Eagle Select FIAs. In early October, we improved the
competitive position of the IncomeShield and our other guaranteed income
products by increasing payout factors. IncomeShield now ranks #1, 2, or
3 in what we believe to be the most important age/deferral combinations."

Matovina continued: "We further enhanced our competitive position in
accumulation products with the introduction of the AssetShield Series on
October 9th. While it is similar to the Choice Series, AssetShield is
for pure accumulation and a lifetime income benefit rider is not
available. AssetShield 10 has the same 54% annual participation rate on
the S&P 500 as the Choice 10. Plus, it has an annual participation rate
of 120% on an S&P 500 Dividend Aristocrats volatility controlled index
strategy and a 175% participation on that same index strategy if the
policyholder chooses a two year strategy term. Our participation rates
compete favorably with the most popular accumulation products in the
independent agent channel. AssetShield also features better liquidity
options than offered with Choice."

Matovina went on to say: "In the bank and broker-dealer channels, we
added one of the 15 largest banks based on assets as a distributor. We
have begun to see new applications from its representatives, and expect
this to be a key account for Eagle Life in 2019. We are also in the
process of hiring three additional employee wholesalers which will bring
our total to six."

American Equity’s investment spread was 2.67% for the third quarter of
2018 compared to 2.64% for the second quarter of 2018 and 2.70% for the
third quarter of 2017. On a sequential basis, the average yield on
invested assets increased by seven basis points while the cost of money
rose four basis points.

Average yield on invested assets was 4.54% in the third quarter of 2018
compared to 4.47% in the second quarter of 2018. This increase was
primarily attributable to portfolio realignment actions taken throughout
the year. Non-trendable investment items of 11 basis points compared to
10 basis points from such items in the second quarter of 2018. The
average yield on fixed income securities purchased and commercial
mortgage loans funded in the third quarter of 2018 was 4.97% compared to
4.77% and 4.43% in the second and first quarters of 2018.

The aggregate cost of money for annuity liabilities of 1.87% in the
third quarter of 2018 was up four basis points from 1.83% in the second
quarter of 2018. The benefit from over hedging index linked interest
obligations was seven basis points in the third quarter of 2018 compared
to six basis points in the second quarter of 2018.

Commenting on investment spread, Matovina said: “The sequential increase
in investment spread in the third quarter primarily reflected a two
basis point increase in the benefit from non-trendable investment income
items and over-hedging. Our investment spread remained under pressure in
the third quarter of 2018 due to the escalation of option costs for
certain index strategies in the last several quarters that is recognized
in the cost of money ratably over the twelve month option period. To
counteract this impact, we initiated renewal rate adjustments on certain
in-force policies in October in addition to the renewal rate actions we
undertook in March. We have flexibility to reduce our crediting rates
and could decrease our cost of money by approximately 0.65% through
further reductions in renewal rates to guaranteed minimums should the
cost of money not return to acceptable levels."

Matovina went on to say: "Our investment spread should benefit from the
higher yields we have been obtaining on investment securities purchases
and commercial mortgage loan fundings, increases in yields on our
floating rate investments and changes in renewal rates. We are also
looking to improve our investment yield through the opportunistic
replacement of lower yielding securities with higher yielding
securities. In early October, we sold $384 million in book value of
securities with an average yield of 3.00%. Since we had declared our
intent to sell these securities, we recognized other than temporary
impairments of $12 million in the third quarter. Including the October
transactions, we have sold $2 billion of book value of lower yielding
securities this year and reinvested the proceeds into higher yielding
securities. The prospect for higher investment yields is quite good, and
we expect our portfolio yield, excluding non-trendable items, to
increase in future quarters."

CAUTION REGARDING FORWARD-LOOKING STATEMENTS

This press release contains forward-looking statements within the
meaning of The Private Securities Litigation Reform Act of 1995.
Forward-looking statements relate to future operations, strategies,
financial results or other developments, and are subject to assumptions,
risks and uncertainties. Statements such as “guidance”, “expect”,
“anticipate”, “believe”, “goal”, “objective”, “target”, “may”, “should”,
“estimate”, “projects” or similar words as well as specific projections
of future results qualify as forward-looking statements. Factors that
may cause our actual results to differ materially from those
contemplated by these forward looking statements can be found in the
company’s Form 10-K filed with the Securities and Exchange Commission.
Forward-looking statements speak only as of the date the statement was
made and the company undertakes no obligation to update such
forward-looking statements. There can be no assurance that other factors
not currently anticipated by the company will not materially and
adversely affect our results of operations. Investors are cautioned not
to place undue reliance on any forward-looking statements made by us or
on our behalf.

CONFERENCE CALL

American Equity will hold a conference call to discuss third quarter
2018 earnings on Tuesday, November 6, 2018 at 9:00 a.m. CT. The
conference call will be webcast live on the Internet. Investors and
interested parties who wish to listen to the call on the Internet may do
so at www.american-equity.com.

The call may also be accessed by telephone at 855-865-0606, passcode
2779888 (international callers, please dial 704-859-4382). An audio
replay will be available shortly after the call on AEL’s website. An
audio replay will also be available via telephone through November 13,
2018 at 855-859-2056, passcode 2779888 (international callers will need
to dial 404-537-3406).

ABOUT AMERICAN EQUITY

American Equity Investment Life Holding Company, through its
wholly-owned operating subsidiaries, issues fixed annuity and life
insurance products, with a primary emphasis on the sale of fixed index
and fixed rate annuities. American Equity Investment Life Holding
Company, a New York Stock Exchange Listed company (NYSE: AEL), is
headquartered in West Des Moines, Iowa. For more information, please
visit www.american-equity.com.

1 Use of non-GAAP financial measures is discussed in this
release in the tables that follow the text of the release.

Portion of OTTI losses recognized in (from) other comprehensive
income

—

(191

)

(1,651

)

(1,281

)

Net OTTI losses recognized in operations

(14,373

)

(464

)

(17,676

)

(1,554

)

Loss on extinguishment of debt

—

(18,389

)

—

(18,817

)

Total revenues

1,193,738

905,953

1,998,083

2,652,382

Benefits and expenses:

Insurance policy benefits and change in future policy benefits

10,721

10,823

32,091

32,684

Interest sensitive and index product benefits

413,089

501,028

1,355,135

1,392,763

Amortization of deferred sales inducements

55,244

14,707

233,779

110,727

Change in fair value of embedded derivatives

383,716

229,702

(585,465

)

628,845

Interest expense on notes and loan payable

6,376

7,597

19,122

23,997

Interest expense on subordinated debentures

3,942

3,502

11,450

10,260

Amortization of deferred policy acquisition costs

81,053

23,023

336,741

162,248

Other operating costs and expenses

31,924

28,782

95,704

82,325

Total benefits and expenses

986,065

819,164

1,498,557

2,443,849

Income before income taxes

207,673

86,789

499,526

208,533

Income tax expense

38,345

29,832

95,333

70,691

Net income

$

169,328

$

56,957

$

404,193

$

137,842

Earnings per common share

$

1.87

$

0.64

$

4.48

$

1.55

Earnings per common share - assuming dilution

$

1.85

$

0.63

$

4.42

$

1.53

Weighted average common shares outstanding (in thousands):

Earnings per common share

90,486

89,069

90,278

88,873

Earnings per common share - assuming dilution

91,651

90,421

91,355

90,171

American Equity Investment Life Holding CompanyUnaudited (Dollars
in thousands, except per share data)

NON-GAAP FINANCIAL MEASURES

In addition to net income, the Company has consistently utilized
non-GAAP operating income and non-GAAP operating income per common share
- assuming dilution, non-GAAP financial measures commonly used in the
life insurance industry, as economic measures to evaluate its financial
performance. Non-GAAP operating income equals net income adjusted to
eliminate the impact of items that fluctuate from quarter to quarter in
a manner unrelated to core operations, and the Company believes measures
excluding their impact are useful in analyzing operating trends. The
most significant adjustments to arrive at non-GAAP operating income
eliminate the impact of fair value accounting for the Company's fixed
index annuity business. These adjustments are not economic in nature but
rather impact the timing of reported results. The Company believes the
combined presentation and evaluation of non-GAAP operating income
together with net income provides information that may enhance an
investor’s understanding of its underlying results and profitability.

Adjustments to net income to arrive at non-GAAP operating income are
presented net of related adjustments to amortization of deferred
sales inducements (DSI) and deferred policy acquisition costs (DAC)
where applicable.

American Equity Investment Life Holding CompanyUnaudited (Dollars
in thousands)

NON-GAAP FINANCIAL MEASURES

Average Stockholders' Equity and Return on
Average Equity

Return on average equity measures how efficiently the Company generates
profits from the resources provided by its net assets. Return on average
equity is calculated by dividing net income and non-GAAP operating
income for the trailing twelve months by average equity excluding
average accumulated other comprehensive income ("AOCI"). The Company
excludes AOCI because AOCI fluctuates from quarter to quarter due to
unrealized changes in the fair value of available for sale investments.